What Military Pay Is Taxable?
Your regular pay is taxable, but some military pay isn’t. The Armed Forces’ Tax Guide lists every excludable allowance.
| Type of pay | Taxable? |
|---|---|
| Active-duty pay for months outside a combat zone | Yes |
| Basic Allowance for Housing (BAH) | No |
| Basic Allowance for Subsistence (BAS) | No |
| Active-duty pay for a month served in a combat zone | No (officers have a cap) |
| Imminent danger or hostile fire pay in a combat zone month | No |
| Reenlistment bonus, if you reenlist in a combat zone month | No |
How the Combat Zone Exclusion Works
How much combat pay you can exclude depends on your rank.
Enlisted Members and Warrant Officers
If you’re enlisted or a warrant officer (including commissioned warrant officers), you can exclude all active-duty pay for any month you serve in a combat zone. Under the combat service exclusion, part of a month counts as a full month.
Commissioned Officers
Your monthly exclusion is capped at the highest enlisted pay rate plus $225 a month in imminent danger pay. The IRS updates the monthly dollar limit each year in Publication 3.
Where Combat Pay Shows Up on Your W-2
Box 12 of your W-2 uses letter codes for special pay, and code Q means nontaxable combat pay. You can choose to count that pay as earned income for the earned income tax credit. Figure the credit both ways and use the better result.
Military Tax Deadlines and Extensions
Returns are due April 15 (or the next business day after a weekend or holiday). Where you serve can push your tax filing deadline later.
| Your situation | Deadline to file |
|---|---|
| Stationed in the U.S. | April 15 |
| Post of duty outside the U.S. and Puerto Rico | June 15, automatically |
| Outside the U.S. and you request more time on Form 4868 | October 15 |
| Serving in a combat zone or contingency operation | 180 days after you leave, plus days left in the filing period when you entered |
With the June 15 extension, interest still builds on unpaid tax from April 15.
The combat zone extension also covers paying tax. If you’re hospitalized for a service injury, the 180 days start after your continuous hospital stay ends.
State Residency for Service Members
Under the Servicemembers Civil Relief Act, your State of Legal Residence is considered your domicile and has the authority to tax your military pay, even if you’re stationed elsewhere. You can change your state of legal residence, along with your withholdings, using DD Form 2058. Your duty state may still tax non-military income you earn there, like off-base job pay.
Spouses can choose to file under the service member’s State of Legal Residence under the Military Spouses Residency Relief Act and the Veterans Benefits and Transition Act of 2018.
Deductions for PCS Moves and Reservists
A permanent change of station (PCS) is an official order moving you to a new duty station. Two deductions can help.
- Active-duty members moving due to a PCS can deduct unreimbursed qualified moving expenses on Form 3903, carried to Schedule 1.
- Reservists can deduct travel expenses for reserve duty more than 100 miles from home using Form 2106.
The reservist deduction is an adjustment to income, which lowers the income you’re taxed on.
Free Military Tax Filing Help
MilTax is free tax prep and e-file software from the Department of Defense, offered through Military OneSource. Service members and their families can use it, and so can qualifying veterans. It has no income limits and covers one federal return plus up to five state returns.
The IRS military tax page has more rules.
